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Lear Capital: Is Fiscal Ravine Really a Gold Mine?

It’s always been curious to me, how Gold reserves of countries are never mentioned in the context of using them to protect against default. I mean, “why possess gold reserves if they are not for the purpose of settling debt or securing much needed credit?” In other words, “Bailing You Out!” when times are tough. Let’s take Greece for example. Greece has a reported 100 tonnes of gold, yet ne’er a word ever about it being used to pay off debt, or, as collateral against economy-saving loans from the ECB.

What we did hear was that, when Greece arrived at a point of bankruptcy, its citizens went on a gold buying spree, cashing in savings to invest in gold. Herein, perhaps, lies the answer to the why-possess-gold question. When the party is over and your paper money could be worth less than the paper your party hat was printed on, protect the gold, not the currency! Gold will never be worth zero! You can’t say that about currencies.

Remember that, as our US markets and the economy try to climb out of our fiscal ravine. Currency advocates would have us believe we can print our way out while still preserving the integrity of our respective currencies. But, when it comes right down to it, the very people flooding the world with printed money are buying gold. According to the World Gold Council, 2012 was a record year for Central Bank gold buying, a trend expected to continue into 2013.

Numbers don’t lie! Since the 2008 debt crisis, our own debt has risen more than 60% and the gold price has doubled. And, never once has it been suggested that our own 8000 tonnes of gold reserves, or portion thereof, will ever be used to settle debt or secure credit. So, while we are to believe that printing money protects the markets, the economy and our currency, the people who actually print the money are not only protecting their current gold reserves, but are adding to them. Protect the gold, not the currency.

For those who see these signs and embrace the facts, opportunity awaits. Over the last decade, as debt rises, gold prices have risen even higher. Looking ahead, the world isn’t going to print less money, it’s going to print more. Even Ben Bernanke is suggesting the debt ceiling be eliminated. Do you believe our debt is going to keep rising? If you do, look around. You may find the ravine in which we are trapped is really a gold mine.

As always, this is my opinion and not necessarily yours. But if you do share my opinion and want to learn more about the potential for gold to protect your wealth, visit LearCapital.com.